Wills 13

Question 1

When will a PR be personally liable to an unknown unpaid beneficiary or creditor?

Answer 1

If they fail to comply with s27 Trustee Act 1925, even if the beneficiary or creditor is not know when a distribution is made.Note: compliance will not protect PRs against claims from known beneficiaries/creditors

Question 2

What is required under s27 of the Trustee Act 1925?

Answer 2

PRs can protect themselves from liability by placing adverts requesting any person interested to contact the PRs’ solicitor within a minimum of two months in:* the London Gazette, * a local newspaper (local to the area in which any land forming part of the estate is situated), and * any other appropriate newspaper (e.g. a trade journal in a situation where the deceased had run a business),PRs should also conduct searches for land held for creditors and for bankruptcy declarations against the deceased and beneficiaries (to protect against the trustee in bankruptcy).

Question 3

A PR is administering the estate of a woman who owned a house in Birmingham. What adverts must the PR place in order to protect themselves?

Answer 3

The PR must place adverts in The London Gazette and the local Birmingham newspaper. If she e.g. owned a restaurant it may be appropriate to also run the advert in any trade publications serving the restaurant industry.

Question 4

What 4 options are available to PRs to protect themselves from liability from claims of known but missing beneficiaries or creditors?

Answer 4

• Make the payment owed into the court and distribute the rest of the estate. * Distribute everything with an indemnity from the beneficiaries (if the beneficiary who gave it has no funds this carries risk for the PR). * Seek a Benjamin Order* Purchase insurance against the risk of a missing claimant appearing. Full enquiries may be required first. (usually cheaper and quicker than applying to court).

Question 5

What is a Benjamin Order?

Answer 5

• A court order giving PRs leave to distribute the estate based on an assumption set out in the order (e.g. that the missing beneficiary should be treated as having died before the deceased). * Full enquiries are first required for this.* This gives full protection for the PRs.

Question 6

How long must a PR wait before distributing the estate to avoid a financial provision claim under the Inheritance (Provision for Family and Dependants) Act 1975?

Answer 6

Until six months have passed from the issue of the grant

Question 7

What must a PR do to protect themselves against future and contingent liabilities of the estate (e.g. where the deceased acted as a guarantor on a loan or there is a possibility of legal proceedings against the estate)

Answer 7

• Estimate and set aside an appropriate amount (though this is unsatisfactory for the PRs)* Seek indemnity from the beneficiaries (but this carries a risk)* Arrange insurance and distribute the entire estate or * Apply to the court for directions as to what to do.

Question 8

How can the PRs ensure they will not become liable for unpaid IHT for failed PETs or CLTs that has been outstanding for 12 months?

Answer 8

HMRC will not pursue the PRs for these liabilities if they remain unpaid by the recipient(s), if the PRs have made fullest enquiries and have obtained a certificate of discharge (this confirms they can proceed with distributing assets).